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Warnings Ignored on Oregon Health Exchange

The Oregon Health Authority last January withheld payment from the company hired to monitor the project, claiming its persistent criticism was inaccurate and inflammatory.

by NICK BUDNICK AND JEFF MANNING, MCCLATCHY NEWS SERVICE
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January 20, 2014

Amid the idealistic fervor of Oregon's effort to build a game-changing health insurance exchange, Ying Kwong did not believe the hype.

In one of a series of revealing emails, the Cornell-educated technology analyst at Oregon's Department of Administrative Services wrote last May that Cover Oregon's managers were being "intellectually dishonest" in claiming the project would be ready Oct. 1.

He likened it to the old sci-fi movie classic, "The Blob," since their foe seemingly couldn't be stopped due to its amorphous plans and political momentum. "You simply don't know how to shoot this beast, because it does not have a known anatomy with the normal vital organs that make it tick."

Kwong wasn't alone. His concerns about Oregon's exchange were echoed by the project's quality assurance contractor as well as the man Kwong was writing to, the Legislature's top IT oversight analyst.

But repeated warnings to high-level state officials fell on deaf ears.

When the $160 million exchange failed to launch, a chaotic manual backup plan took weeks to set up, creating stress and added costs for thousands of Oregonians seeking health coverage.

Three months since the Cover Oregon fiasco exploded into public view, questions have grown about the management failures and communication lapses that allowed it to happen. After dozens of interviews and the review of thousands of pages of legislative reports, memos and emails, The Oregonian has determined:

The project's significant flaws were well documented dating back to November 2011. Multiple independent analysts repeatedly raised questions about poor management along with strong doubts that it could be operational by the Oct. 1, 2013 deadline.

Cover Oregon leaders wavered between despair and an almost evangelical enthusiasm that they could complete the site. In the end they charged ahead, piloting an unfinished, largely untested exchange project right up to the Oct. 1 go-live date with no backup plan ready to go.

Senior officials in Gov. John Kitzhaber's office and elsewhere read at least some of these warnings but took no significant steps to intervene, apparently after being convinced by others the project was on track.

A key official in the massive IT project took steps to silence the critics. The Oregon Health Authority last January withheld payment from the company hired to monitor the project, claiming its persistent criticism was inaccurate and inflammatory.

Kitzhaber and his senior health-care advisors said they didn't know the state's most important IT project was in serious disarray. Kitzhaber, who declined interview requests for this story, said in an earlier appearance before The Oregonian's editorial board: "That's one of my biggest concerns here ... being entirely outside the loop."

Mike Bonetto, the governor's health advisor and now chief-of-staff, was Kitzhaber's liaison to Cover Oregon. He and Bruce Goldberg, then head of OHA and now interim-director of Cover Oregon, read at least some of the warnings, they confirmed. But in the end, they accepted the assurances that all was well. Goldberg said flatly he was "misled," by Rocky King, Cover Oregon director, and Carolyn Lawson, the OHA chief information officer responsible for the project.

"I just didn't get the accurate information," Bonetto said.

One of the ironies of the Cover Oregon debacle is that it happened despite multiple layers of oversight intended to make sure Bonetto and others had such information.

Besides management at Cover Oregon and the Oregon Health Authority -- the two leads on the project -- there was Maximus, a Reston, Va. company hired to ensure quality and provide accurate oversight information. There was Kwong and other technology experts at DAS. And there was Bob Cummings, the technology oversight guru at Oregon's Legislative Fiscal Office.

There also was a team of federal officials, the Cover Oregon board of directors and a Legislative IT oversight committee.

So what happened?

Feuding Agencies

The exchange was born with the clock ticking. Oregon Health Authority received a $48 million federal grant in February 2011 and was given just 27 months to complete the online exchange.

The first warning came immediately. Rep. Dennis Richardson, R-Central Point -- then holding a powerful spot on the Legislature's budget committee -- blocked the grant until OHA agreed to hire an outside consultant to provide objective information and oversight to prevent another in a long line of failed state IT projects.

Finally hired in November 2011, Maximus analysts immediately noted high risks due to insufficient management controls and delays due to a reorganization authorized by Goldberg.

Those warnings, and others like them, were directed to Goldberg, Lawson, King, Bonetto and Sean Kolmer, another Kitzhaber advisor. Also in the loop were IT analysts for DAS and the Legislature, Kwong and Cummings, both of whom declined to comment for this story.

One issue highlighted by Maximus: The exchange was to be built by Lawson, head of IT projects for OHA, but was ostensibly directed by Cover Oregon, set up by Kitzhaber and the Legislature as an independent public corporation.

It didn't take long for tension to develop between the two organizations. In fact, documents show Cover Oregon's focus was spent trying to wrest control of the project from the Oregon Health Authority. The exchange's managers didn't agree with Lawson's vision for the project, and complained they couldn't get information from her regarding the work of Oracle, the contractor responsible for building the exchange.

As the two bureaucracies feuded, warnings went unheard.

In May 2012, Cummings prepared a briefing for lawmakers warning that, because of poor management controls at Cover Oregon, the odds of being ready in October 2013 were "not good."

He found a receptive ear in Richardson, the Republican lawmaker. Now a candidate for governor, Richardson wrote Kitzhaber, the Democrat running for re-election, saying the project was on a "path toward failure and disgrace" and requested that King hire experienced managers.

Richardson warned the project "is now in jeopardy of becoming the next state IT fiasco."

Bonetto wrote the governor saying he'd demanded an immediate action plan to address the concerns. Goldberg wrote Richardson saying he would ensure his concerns would be "addressed and not ignored."

By January 2013, Lawson was fed up with Maximus. The company had been criticizing her project for more than a year. When presented with another draft report that hammered her management further, she threatened to withhold payment on Maximus's latest bill demanding a total rewrite. Attempting to muzzle a company whose whole purpose was to be an independent monitor struck the veteran IT hands as ludicrous. Maximus got paid only after Cummings and Kwong intervened.

The following month, King was again complaining about OHA. He sent Goldberg an email edited by Bonetto that complained about the lack of progress and information on a Medicaid interface to be contributed by the Oregon Health Authority, records show.

"I've become increasingly concerned" over the lack of progress," King wrote in the Feb. 19 email. "I need to have your help and assurance that OHA can deliver the technical solution we need. There are other critical risk areas. ... No project of this size can rely on 'It will be OK.'"

Warnings Disputed

In March 2013, King was quoted in The Oregonian describing his expectation of startup problems and potential delay, saying that lawmakers all want to know "will it work?" His stock answer: "I haven't the foggiest idea."

Starting in April, records show, Cummings sent the first of a series of emails warning Cover Oregon officials they were months behind schedule and needed to have a full, manual processing plan ready to go Oct. 1. Those warning continued through late August.

In May, the entire project shifted from OHA to Cover Oregon. But King's doubts increased, fueled by the monthly Maximus reports and his staff's discoveries of widespread programing problems by Oracle, records show. King emailed Oracle officials with his concerns and they promised to fix the problems and have the site ready by October 1.

Cover Oregon is "going to either fail big time or be national heroes," King wrote in a May 31 email to Sean Kolmer, then Kitzhaber's associate advisor on health care policy.

King also emailed Goldberg and Bonetto on June 3, warning them not to believe OHA assurances that the Medicaid enrollment portion of the exchange was on track. "This again puts our backs against the wall," he wrote. "I just did not want you to be blindsided."

In an interview, Bonetto said that whenever King raised the alarm over the project, he would later follow up with an assurance that things were back on track. "For every blow-up from Rocky, he also told us consistently that we were good to go."

Testing that was supposed to start in May was delayed, triggering new concerns by Cummings and Kwong. Then King's health worsened, forcing him to take six weeks of leave, leaving his second-in-command, Triz delaRosa, in charge.

Despite mounting delays, strife between the agencies, King's admitted lack of IT knowledge and the questions about the quality of Oracle's work, neither the governor's office nor more senior officials at DAS intervened.

Mixed Messages

Bonetto defends his level of attention to the project as "appropriate," saying he relied on the board of Cover Oregon to make sure progress was adequate, as well as the federal government, which periodically checked on the site.

The all-volunteer board of Cover Oregon appointed by Kitzhaber has no IT or project management experience. With only monthly meetings, the board was meant to be hands-off giving King full management authority.

Meanwhile, the federal reviews were not always stringent. On May 31, after one federal inspection, King sent Goldberg, Bonetto and Kolmer an email saying the questions asked by the federal visitors were neither "tough" nor very relevant. "Behind the eight ball as we are," he wrote. "I think our federal partners were impressed."

King says he alternated between a rose-tinted hope that Oracle would pull it off, balanced by the warnings of Kwong, Cummings and Maximus. Toward the end, he chose to believe the Oracle promises that the project would be ready to go Oct 1, rather than the doomsayers.

He says he kept Bonetto and Goldberg fully informed on the project's status in regular discussions, including the concerns of Maximus. "They were discussed frequently with Dr. Goldberg. He had the reports just like we had them," he said. "Nothing was secret."

King says he never talked directly with Kitzhaber, but was open about his concerns with the governor's advisors and Goldberg. When his statements sounded reassuring, he was relaying Oracle's commitments to deliver.

Goldberg said despite the Maximus reports, and warnings from King and the analysts that the project was in trouble, he relied on Lawson. "I relied on our chief information officer's technical expertise. I think that's what someone in my position has to do."

Contacted at her home in Sacramento, Lawson declined to comment for this article. She was asked to resign in December and King has been on leave since November with his retirement set for March 5.

High-Stakes

In August, with the launch of the exchange just six weeks away, the resident skeptics were being shunted aside.

Cummings reached out to Cover Oregon one more time in an Aug. 16 email asking about their plans for the Oct. 1 go-live date, as well as the manual processing backup plan. "Bob, I will try to make this simple," answered Cover Oregon's delaRosa. "We will be ready to do business on everything, manual or automated."

Cummings and Kwong, who was copied on the delaRosa exchange, were stunned.

Cover Oregon had somehow convinced itself it was prepared for anything, when Cummings and Kwong knew their technology was a mess. Not only that, but their backup plan for processing applications on paper was nowhere near ready.

"If this were poker, Triz is describing an "all-in," Kwong wrote to Cummings. "Sounds good to those of us standing around the card table observing ... lots of resolve, focused, no-nonsense. To me, the hand has nothing – no flush, no straight, not even a pair. After all, there is no testable software release, no technical environment, and the paper forms are not even ready to go to the printer."

Cummings advised Kwong they'd done all they could. "Your concerns are valid, but I think that all of this is out of DAS's and LFO's hands. ... In this game of poker, if Cover Oregon doesn't have a great hand, we all lose."

A clearly upset Kwong marveled at Cover Oregon's determination to go forward. He even raised the possibility of going to Oregon's Insurance Division or perhaps the Oregon Department of Justice to block the exchange from going live. It's not clear if he did.

"I don't think we have any business launching an exchange whose primary functions of selling and buying are not verified and validated to be ready," he said. "How can the state conduct business like this?"